I had hoped to take a day off blogging about Halbig and King (the ObamaCare Subsidies cases), but I cannot allow another inaccurate narrative about ObamaCare to take hold. Over at Volokh, my friend Ilya Somin argues that the holding in Halbig is not absurd because Congress uses statutory schemes all the time that try to incentivize states to administer federal law (and to penalize them if they don't). It is true we see schemes like that all the time--Medicaid is a prime example--but the insurance exchange design is NOT one of them. This federalism argument was made before the D.C. Circuit and even Judge Griffith didn't buy it in his ruling for the challengers. I tried to dispel this myth back in March, when I wrote the following on this blog: "This
is not a conditional spending program analogous to Medicaid. The challengers' strategy in
this round has been to contend that the subsidies are part of an
overarching ACA "carrots and sticks" strategy to lure states into
health reform and penalize them if they decline. On that version of
the story, it might make sense that subsidies would be unavailable in states
that do not run their own exchanges. In their view, the subsidies are therefore
exactly like the ACA’s Medicaid provision (from appellants’brief: “The ACA’s subsidy provision
offered an analogous ‘deal’ to entice states to establish Exchanges—because
Congress (wisely, in hindsight) knew it had to offer huge incentives for the
states to assume responsibility for that logistically nightmarish and
politically toxic task.”)

Putting aside the fact that no one
thought the states wouldn’t want to run the exchanges themselves (indeed,
Senators were demanding that option for their states), the exchange provisions
simply do not work in the same way as Medicaid. Unlike the ACA’s Medicaid
provisions, the exchange provisions have a federal fallback: Medicaid is
use it or lose it; the exchanges are do it, or the feds step in and do it for
you. In other words, this isn’t Medicaid; it’s the Clean Air Act
(CAA). If a state decides not to create its own implementation plan under
the CAA, its citizens do not lose the benefit of the federal program—the feds
run it. The same goes for the ACA’s exchanges and so it would be nonsensical to
deprive citizens in federal-exchange states of the subsidies. More
importantly, if we are going to compare apples to oranges, the ACA’s Medicaid
provisions have an explicit provision stating that if the state declines
to participate, it loses the program funds (this was the provision at issue in NFIB
v. Sebelius in 2012). The ACA’s subsidy provisions, in
contrast, have no such provision, strong evidence that the subsidies were was
not intended to be forfeited if the states did not participate. If the
challengers are going to insist on strict textual arguments, this is exclusio
unius 101: the rule of interpretation that provides that where Congress
includes a specific provision in one part of the statute but does not include
an analogous provision elsewhere, that omission is assumed intentional."

* * *

It
may be true that the ACA’s politics have created a landscape no one ever
predicted—one in which federalism-focused states, whose congressional representatives
were demanding the states’ rights to
establish exchanges instead of the federal government—have decided that
politics is more important than federalism and opted out.But what’s happened in hindsight doesn’t change
what happened when the statute was enacted and how the statute is actually designed. What happened when the statute was designed was that no one thought the states needed a carrot to do this and the statute was never designed as a "use or lose it" incentive, like Medicaid.